Arco Metal vs. Samahan ng Manggagawa sa ArcoOCTOBER 23, 2012 ~ VBDIAZ

Arco Metal vs. Samahan ng Manggagawa sa Arco

G.R. No. 170734

Facts:

Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union of petitioner’s rank and file employees.  Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave encashment of three union members in amounts proportional to the service they actually  rendered in a year, which is less than a full 12 months. Respondent protested the prorated scheme, claiming that on several occasions petitioner did not prorate the payment of the same benefits  to 7 employees who had not served for  the full 12 months.  The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004.  According to respondent, the prorated payment violates the rule against diminution of benefits under Article 100 of the Labor Code. Thus, they filed a complaint before the NCMB.  The parties submitted the case for voluntary arbitration.

The voluntary arbitrator, Mangabat, ruled in favor of petitioner and found that the giving of  the contested benefits in full, irrespective of the actual service rendered within one year has not  ripened  into a practice.  He noted  the affidavit of Baingan, manufacturing group head of petitioner, which states that the giving in full of the benefit was a mere error.  He also interpreted the phrase  “for each year of service” found in the pertinent CBA provisions to mean that an employee must have

rendered  one year of service in order to be entitled to the full benefits provided in the CBA.

The CA ruled that the CBA did not intend to foreclose the application of prorated payments of leave benefits to covered employees.  The appellate court found that petitioner, however, had an existing voluntary practice of paying the aforesaid benefits in full to its employees, thereby rejecting the claim that   petitioner  erred  in  paying  full  benefits  to  its seven employees.  The appellate court noted that aside from the affidavit of petitioner’s officer, it has not presented any evidence in support of its position that it has no voluntary practice of granting the contested benefits in full and without regard to the service actually rendered within the year.  It also questioned why it took petitioner 11 years before it was able to discover the alleged error.

Issue: WON the  grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered constitutes voluntary employer practice and, consequently, the prorated payment of the said benefits does not constitute diminution of benefits under Article 100 of the Labor Code.

Held:

Petitioner claims that its full payment of benefits  regardless of the length of service to the company does not constitute voluntary employer practice.  It points out that the payments had been erroneously made and they occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003.  According to petitioner, it was only in 2003 that the accounting department discovered the error “when there were already 3 employees involved with prolonged absences and the error was corrected by implementing the pro-rata payment of benefits pursuant to law and their existing CBA.” It adds that the seven

earlier cases of full payment of benefits  went  unnoticed considering the  proportion of one employee concerned (per year) vis à vis the 170 employees  of the company.   Petitioner describes the situation as a “clear oversight” which should not be taken against it. To further bolster its case, petitioner argues that for a grant of a benefit to be considered a practice, it should have been practiced over a long period of time and must be shown to be consistent, deliberate and intentional, which is not what happened in this case.  Petitioner tries to make a case out of the fact that the CBA has not been modified to incorporate the giving of full benefits regardless of the length of service, proof that the grant has  not  ripened into company practice.

Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or eliminated by the employer.  The principle of non-diminution of benefits  is founded on the Constitutional mandate to “protect the rights of workers and promote their welfare,” and  “to afford labor full protection.” Said mandate in turn is the basis of Article 4 of the Labor Code which states that “all doubts in the implementation and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of labor.” Jurisprudence is replete with cases which recognize the right of employees  to benefits which were voluntarily given by the employer and which ripened into company practice.  Thus in Davao Fruits Corporation v.  Associated Labor Unions, et al. where an employer had freely and continuously included in the computation of the 13th month pay those items that were expressly excluded by the law, we held that the act which was  favorable to the employees though not conforming to law had thus ripened into a practice and could not  be withdrawn, reduced, diminished, discontinued or eliminated.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and consistently granting full benefits to its employees regardless of  the length of service rendered.  True, there were only a total of seven employees who benefited from such a practice, but it was an established practice nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a company practice  must be exercised in order to constitute voluntary company practice. Thus, it can be 6 years, 3 years, or even as short as 2 years. Petitioner cannot shirk away from its responsibility by merely claiming that it was a mistake or an error,  supported only by an affidavit of its manufacturing group head.

In cases involving money claims of employees, the employer has the burden  of  proving  that  the  employees  did  receive  the  wages   and  benefits  and  that  the  same  were paid in accordance with law.

Petition denied